EXHIBIT 1
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the ___ day of October, 2001, by and
among CompuDyne Corporation, a corporation organized under the laws of
the State of Nevada (the "Company"), with its principal offices at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a stockholder of the Company
who is listed on Exhibit A-1 hereto (the "Selling Stockholder") and
the purchaser whose name and address is set forth on the signature page
hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company, the Selling Stockholder and the Purchaser agree
as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the
terms and conditions of this Agreement, the Company has authorized the
sale of up to 1,076,569 shares (the "Company Shares") of common stock,
par value $0.75 per share (the "Common Stock"), of the Company and the
Selling Stockholder has authorized the sale of up to an aggregate of
1,373,431 shares (the "Selling Stockholder Shares") of the Company's
Common Stock. The Company Shares and the Selling Stockholder Shares
are referred to herein collectively as the "Shares." The total number
of Shares sold shall not exceed a total of 2,450,000 shares.
SECTION 2. Agreement to Sell and Purchase the Shares. At the
Closing (as defined in Section 3), (i) the Company will sell to the
Purchaser, and the Purchaser will buy from the Company, upon the terms
and conditions hereinafter set forth, the number of Shares (at the
purchase price) equal to the total number of Shares shown below to be
purchased by the Purchaser, multiplied by a fraction, the numerator of
which is the number of Company Shares to be sold by the Company pursuant
to the Agreements (as defined below) and the denominator of which is the
total number of Shares to be sold pursuant to the Agreements, and (ii)
the Selling Stockholder will sell to the Purchaser, and the Purchaser
will buy from the Selling Stockholder, upon the terms and conditions
hereinafter set forth, the number of Shares (at the purchase price)
equal to the total number of Shares shown below to be purchased by the
Purchaser, multiplied by a fraction, the numerator of which is the
number of Selling Stockholder Shares to be sold by the Selling
Stockholder pursuant to the Agreements and the denominator of which is
the total number of Shares to be sold pursuant to the Agreements, upon
the terms and conditions hereinafter set forth, the number of Shares (at
the purchase price) shown below. If the quotient of any of the foregoing
calculations would not result in a whole number of shares, the
Purchaser's allocation between Selling Stockholder Shares and Company
Shares shall be determined by the Company and the Placement Agent (as
defined below) in their reasonable discretion.
Price Per
Number to Be Shares In Aggregate
Purchased Dollars Price
--------- ------- -----
The Company and the Selling Stockholder propose to enter into this
same form of purchase agreement with certain other investors (the "Other
Purchasers") and expect to complete sales of the Shares to them. The
Purchaser and the Other Purchasers are hereinafter sometimes
collectively referred to as the "Purchasers," and this Agreement and the
agreements executed by the Other Purchasers are hereinafter sometimes
collectively referred to as the "Agreements." The term "Placement
Agent" shall mean Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
SECTION 3. Delivery of the Shares at the Closing. The completion
of the purchase and sale of the Shares (the "Closing") shall occur at
the offices of Stroock & Stroock & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ as soon as practicable and as agreed by the parties
hereto following notification by the Securities and Exchange Commission
(the "Commission") to the Company of the Commission's willingness to
declare effective the registration statement to be filed by the Company
pursuant to Section 8.1 hereof (the "Registration Statement") at a place
and time (the "Closing Date") to be agreed upon by the Company, the
Selling Stockholder and the Placement Agent and of which the Purchasers
will be notified by facsimile transmission or otherwise; provided,
however, that such date shall be no more than three business days
following the effectiveness of the Registration Statement.
At the Closing, the Company and/or the Selling Stockholder shall
deliver to the Purchaser one or more stock certificates registered in
the name of the Purchaser, or, if so indicated on the Stock Certificate
Questionnaire attached hereto as Appendix I, in such nominee name(s) as
designated by the Purchaser in writing, representing the number of
Shares set forth in Section 2 above and bearing an appropriate legend
referring to the fact that the Shares were sold in reliance upon the
exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act") provided by Section 4(2) thereof. The Company
will promptly substitute one or more replacement certificates without
the legend at such time as the Registration Statement is effective. The
name(s) in which the stock certificates are to be registered are set
forth in the Stock Certificate Questionnaire attached hereto as Appendix
I. The Company's obligation to complete the purchase and sale of the
Company Shares and deliver such stock certificate(s) to the Purchaser at
the Closing shall be subject to the following conditions, any one or
more of which may be waived by the Company: (a) receipt by the Company
of same-day funds in the full amount of the purchase price for the
Company Shares being purchased hereunder and the additional payment
described in the paragraph below; (b) completion of the purchases and
sales under the Agreements with all of the Other Purchasers; and (c) the
accuracy in all material respects of the representations and warranties
made by the Purchasers and the fulfillment of those undertakings of the
Purchasers to be fulfilled prior to the Closing. The Selling
Stockholder's obligation to complete the purchase and sale of the
Selling Stockholder Shares and deliver such stock certificate(s) to the
Purchaser at the Closing shall be subject to the following conditions,
any one or more of which may be waived by the Selling Stockholder: (a)
receipt by the Selling Stockholder of same-day funds in the amount
determined as described in the paragraph below; (b) completion of the
purchases and sales under the Agreements with the Other Purchasers; and
(c) the accuracy in all material respects of the representations and
warranties made by the Purchasers and the fulfillment of those
undertakings of the Purchasers to be fulfilled prior to the Closing.
The Purchaser's obligation to accept delivery of such stock
certificate(s) and to pay for the Shares evidenced thereby shall be
subject to the following conditions: (a) the Commission has notified the
Company of the Commission's willingness to declare the Registration
Statement effective on or prior to the 60th day after the date such
Registration Statement was filed by the Company; (b) that the
representations and warranties made by the Company and the Selling
Stockholder herein are accurate in all material respects as of the date
of this Agreement and as of the Closing Date; and (c) that the Company
and the Selling Stockholder have fulfilled, in all material respects,
all undertakings to be fulfilled prior to Closing. The Purchaser's
obligations hereunder are expressly not conditioned on the purchase by
any or all of the Other Purchasers of the Shares that they have agreed
to purchase from the Company and the Selling Stockholder.
In connection with the acquisition of Tiburon, Inc., the Company
and the Selling Stockholder agreed that the Selling Stockholder would
receive the first $8.75 per share of common stock sold by the Selling
Stockholder in this offering. The Company will receive the excess of
the per share purchase price from $8.75 through $10.00. The Company
and the Selling Stockholder will share equally in the excess of the
per share purchase price above the sum of $10.00 and the per share
allocation of the Placement Agent's fees and expenses incurred in
connection with this offering.
SECTION 4. Representations, Warranties and Covenants of the
Company. The Company hereby represents and warrants to, and covenants
with, the Selling Stockholder and the Purchaser as follows:
4.1 Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws
of the State of Nevada and the Company is qualified to do business as a
foreign corporation in each jurisdiction in which qualification is
required, except where failure to so qualify would not reasonably be
expected to have a material adverse effect upon the business, financial
condition, properties or operations of the Company and all of its
subsidiaries, which are listed on Exhibit B (each a "Subsidiary" and
collectively the "Subsidiaries") taken as a whole (a "Material Adverse
Effect"). Each Subsidiary is a direct wholly-owned subsidiary of the
Company. Each Subsidiary is duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is
qualified to do business as a foreign corporation in each jurisdiction
in which qualification is required, except where failure to so qualify
would not have a Material Adverse Effect.
4.2 Authorized Capital Stock. Except as disclosed in or
contemplated by the Confidential Private Placement Memorandum dated
September 27, 2001 prepared by the Company, including all Exhibits
(except Exhibit D) supplements and amendments thereto (the "Private
Placement Memorandum"), the Company had authorized and outstanding
capital stock as set forth under the heading "Capitalization" in the
Private Placement Memorandum as of the date set forth therein; the
issued and outstanding shares of the Company's Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities
laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and
conform in all material respects to the description thereof contained
in the Private Placement Memorandum. Except as disclosed in the
Private Placement Memorandum, the Company does not have outstanding
any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock, stock bonus and
other stock plans or arrangements and the options or other rights
granted and exercised thereunder, set forth in the Private Placement
Memorandum accurately and fairly presents the information required to
be shown with respect to such plans, arrangements, options and rights.
With respect to each Subsidiary, (i) the Company owns 100% of the
Subsidiary's capital stock (except for directors' qualifying shares),
(ii) all the issued and outstanding shares of the Subsidiary's capital
stock have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with applicable federal
and state securities laws, were not issued in violation of or subject
to any preemptive rights or other rights to subscribe for or purchase
securities, and (iii) except for any liens in favor of LaSalle Bank
National Association, there are no outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase,
any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of the Subsidiary's capital stock
or any such options, rights, convertible securities or obligations.
4.3 Issuance, Sale and Delivery of the Shares. The Company Shares
have been duly authorized and, when issued, delivered and paid for in
the manner set forth in this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, and will conform in all material
respects to the description thereof set forth in the Private Placement
Memorandum. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Company
Shares by the Company pursuant to this Agreement. No stockholder of the
Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company's intent
to file the registration statement to be filed pursuant to Section 8.1
(the "Registration Statement") to require the Company to register the
sale of any shares owned by such stockholder under the Securities Act
in the Registration Statement. No further approval or authority of the
stockholders, other than the Selling Stockholder, or the Board of
Directors of the Company will be required for the issuance and sale of
the Company Shares to be sold by the Company as contemplated herein.
4.4 Due Execution, Delivery and Performance of this Agreement.
The Company has full legal right, corporate power and authority to enter
into this Agreement and perform the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by the
Company. The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions herein contemplated
will not violate any provision of the organizational documents of the
Company or any of its Subsidiaries and will not result in the creation
of any lien, charge, security interest or encumbrance upon any assets
of the Company or any of its Subsidiaries pursuant to the terms or
provisions of, and will not (i) conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under (A) any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Company or any of its Subsidiaries is a party or
by which the Company or any of its Subsidiaries or any of their
respective properties may be bound or affected and in each case which
would have a Material Adverse Effect, or (B) to the Company's knowledge,
any statute or any judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its Subsidiaries
or any of their respective properties where such conflict, breach,
violation or default is likely to, result in a Material Adverse Effect.
No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, except
for compliance with the blue sky laws and federal securities laws
applicable to the offering of the Shares. Upon the execution and
delivery of this Agreement, and assuming the valid execution thereof by
the Selling Stockholder and the Purchaser, this Agreement will
constitute valid and binding obligations of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as the indemnification agreements of the
Company in Section 8.3 hereof may be legally unenforceable.
4.5 Accountants. The firm of Deloitte & Touche LLP which has
expressed its opinion with respect to the consolidated financial
statements to be included in the Registration Statement and the
Prospectus which forms a part thereof, is an independent accountant as
required by the Securities Act and the rules and regulations promulgated
thereunder (the "Rules and Regulations").
4.6 No Defaults. Except as disclosed in the Private Placement
Memorandum, and except as to defaults, violations and breaches which
individually or in the aggregate would not have a Material Adverse
Effect on the Company or any of its Subsidiaries taken as a whole,
neither the Company nor any of its Subsidiaries is in violation or
default of any provision of its certificate of incorporation or bylaws,
or in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound; and, to the
Company's knowledge, there does not exist any state of fact which, with
notice or lapse of time or both, would constitute an event of default on
the part of the Company or any of its Subsidiaries as defined in such
documents, except such defaults which individually or in the aggregate
would not have a Material Adverse Effect.
4.7 Contracts. The contracts described in the Private Placement
Memorandum that are material to the Company or its Subsidiaries are in
full force and effect on the date hereof; and neither the Company nor
any of its Subsidiaries is, nor to the Company's knowledge is any other
party in breach of or default under any of such contracts which would
have a Material Adverse Effect.
4.8 No Actions. Except as disclosed in the Private Placement
Memorandum, there are no legal or governmental actions, suits or
proceedings pending or, to the Company's knowledge, threatened in
writing to which the Company or any of its Subsidiaries is or may be a
party or of which property owned or leased by the Company or any of its
Subsidiaries is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings,
individually or in the aggregate, might prevent or might reasonably be
expected to materially and adversely affect the transactions
contemplated by this Agreement or result in a Material Adverse Effect;
and no labor disturbance by the employees of the Company exists, to
the Company's knowledge, or is imminent which might reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries is party to or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory
body administrative agency or other governmental body.
4.9 Properties. Each of the Company and its Subsidiaries has good
and marketable title to all the properties and assets reflected as owned
by it in the consolidated financial statements included in the Private
Placement Memorandum, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such
consolidated financial statements, or (ii) those which are not material
in amount and do not adversely affect the use made and intended to be
made of such property by the Company or any of its Subsidiaries, or
(iii) such liens as may be in place in connection with the Company's
financing arrangements with LaSalle Bank National Association, described
in the Private Placement Memorandum and such interests of the Industrial
Development Board of the city of Montgomery, Alabama as may be in place
in connection with industrial revenue bonds with respect to facility
improvements. Each of the Company and its Subsidiaries holds its leased
properties under valid and binding leases, with such exceptions as are
not materially significant in relation to its business taken as a whole.
4.10 No Material Change. Since December 31, 2000 and except as
described in the Private Placement Memorandum, (i) the Company and its
Subsidiaries have not incurred any material liabilities or obligations,
indirect, or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of
business (other than the agreement with Tiburon Inc. pursuant to which
Tiburon, Inc. will be merged with and into a wholly-owned subsidiary of
the Company); (ii) the Company and its Subsidiaries have not sustained
any material loss or interference with its businesses or properties from
fire, flood, windstorm, accident or other calamity not covered by
insurance; (iii) the Company and its Subsidiaries have not paid or
declared any dividends or other distributions with respect to its
capital stock and neither the Company nor any of its Subsidiaries is in
default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock of
the Company or any of its Subsidiaries other than the sale of the
Company Shares hereunder, shares or options issued pursuant to employee
equity incentive plans or purchase plans approved by the Company's Board
of Directors and repurchases of shares or options pursuant to repurchase
plans already approved by the Company's Board of Directors, or
indebtedness material to the Company or any of its Subsidiaries (other
than in the ordinary course of business, or arising in connection with
the Company's agreement with Tiburon, Inc., which have been disclosed
by the Company in the Private Placement Memorandum); and (v) any other
event or change that would have a Material Adverse Effect.
4.11 Intellectual Property.
(a) The Company has ownership or license or legal right to
use all material patent, copyright, trade secret and trademark rights
known by it to be necessary to the conduct of the business of the
Company as now conducted (collectively, "Intellectual Property") other
than Intellectual Property generally available on commercial terms from
other sources.
(b) All material licenses or other material agreements under
which (i) the Company is granted rights in Intellectual Property, other
than Intellectual Property generally available on commercial terms from
other sources, and (ii) the Company has granted rights to others in
Intellectual Property owned or licensed by the Company, are in full
force and effect and, to the knowledge of the Company, there is no
material default by the Company or any other party thereto.
(c) The Company believes it has taken all steps required in
accordance with sound business practice and business judgment to
establish and preserve its ownership of all material copyright, trade
secret and other proprietary rights with respect to its products and
technology.
(d) To the knowledge of the Company, the present business,
activities and products of the Company do not infringe any intellectual
property of any other person, except where such infringement would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company. No proceeding charging the Company with infringement of any
adversely held Intellectual Property has been filed. To the knowledge
of the Company, the Company is not making unauthorized use of any
confidential information or trade secrets of any person. To the
Company's knowledge, the activities of the Company or any of its
employees on behalf of the Company do not violate any agreements or
arrangements known to the Company which any such employees have with
other persons, if any.
(e) None of the Company's existing patents is material to its
business, operations or prospects, taken as a whole.
4.12 Compliance. Neither the Company nor any of its Subsidiaries
has been advised, nor has reason to believe, that it is not conducting
its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting its business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in
compliance would not have a Material Adverse Effect.
4.13 Taxes. Each of the Company and its Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns
and has paid or accrued all taxes shown as due thereon, and neither the
Company nor any of its Subsidiaries has knowledge of a tax deficiency
which has been or might be asserted or threatened against it which could
have a Material Adverse Effect.
4.14 Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchaser hereunder will be, or will have been, fully paid or
provided for by the Company and all laws imposing such taxes will be or
will have been complied with.
4.15 Investment Company. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an investment company, within the meaning of the
Investment Company Act of 1940, as amended.
4.16 Offering Materials. The Company has not distributed and will
not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Shares other than the
Private Placement Memorandum or any amendment or supplement thereto.
The Company has not in the past nor will it hereafter take any action
independent of the Placement Agent to sell, offer for sale or solicit
offers to buy any securities of the Company which would bring the offer,
issuance or sale of the Shares, as contemplated by this Agreement,
within the provisions of Section 5 of the Securities Act, unless such
offer, issuance or sale was or shall be within the exemptions of Section
4 of the Securities Act.
4.17 Insurance. The Company maintains insurance of the types and
in the amounts that the Company reasonably believes is adequate for its
business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against by similarly situated companies, all of which insurance is in
full force and effect.
4.18 Contributions. Since 1996, the Company has not at any time,
directly or indirectly, (i) made any unlawful contribution to any
candidate for public office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any
jurisdiction thereof.
4.19 Additional Information. The information contained in the
following documents, which the Placement Agent has furnished to the
Purchaser, or will furnish prior to the Closing, does not include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading, as of their respective final dates:
(a) the Company's Annual Report on Form 10-K for the year
ended December 31, 2000;
(b) the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2001 and June 30, 2001;
(c) the draft Registration Statement;
(d) the Private Placement Memorandum, including all addenda
and exhibits thereto (other than the Appendices); and
(e) all other documents, if any, filed by the Company with
the Commission since June 30, 2001 pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
4.20 Legal Opinion. At the Closing, ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP,
counsel to the Company, will deliver its legal opinion to the Placement
Agent, which opinion shall be in form and substance reasonably
satisfactory to the Placement Agent's counsel. Such opinion shall also
state that each of the Purchasers may rely thereon as though it was
addressed directly to such Purchaser. In rendering such opinion,
counsel to the Company may rely on the opinion of Nevada counsel for all
matters involving the laws of the State of Nevada.
4.21 Certificate. At the Closing, the Company will deliver to the
Purchaser a certificate executed by the Chairman of the Board or
President and the chief financial or accounting officer of the Company,
dated the Closing Date, in form and substance reasonably satisfactory to
the Purchaser, to the effect that the representations and warranties of
the Company set forth in this Section 4 are true and correct as of the
date of this Agreement and as of the Closing Date, and the Company has
complied in all material respects with all the agreements and satisfied
all the conditions herein on its part to be performed or satisfied on
or prior to such Closing Date.
SECTION 5. Representations, Warranties and Covenants of the
Selling Stockholder. The Selling Stockholder represents, warrants and
covenants to the Company and to the Purchaser that:
5.1 Due Execution and Delivery. The Selling Stockholder has full
power and authority to enter into this Agreement and to carry out all
the terms and provisions hereof and thereof to be carried out by it.
All authorizations and consents necessary for the execution and
delivery by the Selling Stockholder of this Agreement have been given.
This Agreement has been duly authorized, executed and delivered by or
on behalf of the Selling Stockholder and this Agreement will constitute
a legal, valid and binding obligation of the Selling Stockholder,
enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
5.2 Good Title. The Selling Stockholder now has, and at the time
of delivery thereof hereunder will have, (i) good and marketable title
to the Shares to be sold by the Selling Stockholder hereunder, free and
clear of all encumbrances, and (ii) full legal right and power, and all
authorizations and approvals required by law, to sell, transfer and
deliver the Selling Stockholder Shares to the Purchasers hereunder and
to make the representations, warranties and agreements made by the
Selling Stockholder herein.
5.3 No Defaults. None of the execution, delivery or performance
of this Agreement, and the consummation of the transactions contemplated
herein or therein by the Selling Stockholder conflicts or will conflict
with or results or will result in any breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the
creation or imposition of any encumbrance upon, any property or assets
of the Selling Stockholder pursuant to (i) the terms of any contract or
other agreement to which the Selling Stockholder is a party or by which
it is bound or to which any of its properties is subject, which
conflict, breach, violation or default would adversely affect the
Selling Stockholder's ability to perform its obligations hereunder; (ii)
any statute, rule or regulation of any governmental body having
jurisdiction over the Selling Stockholder or any of its activities or
properties; or (iii) the terms of any judgment, decree or order of any
arbitration or governmental body having such jurisdiction.
5.4 Consents. No consent, approval, authorization or order of, or
any filing or declaration with, any governmental body is required for
the consummation by the Selling Stockholder of the transactions on its
part contemplated herein, except such as may be necessary under federal
and state securities or blue sky laws.
5.5 Material Information. On the date of the Private Placement
Memorandum, the information with respect to the Selling Stockholder
provided in writing by the Selling Stockholder expressly for use therein
and included therein did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
5.6 Legal Opinion. At the Closing, counsel to the Selling
Stockholder will deliver its legal opinion to the Placement Agent in
the form of Exhibit C hereto. Such opinion also shall state that each
of the Purchasers may rely thereon as though it were addressed directly
to such Purchaser.
SECTION 6. Representations, Warranties and Covenants of the
Purchaser.
(a) The Purchaser represents and warrants to, and covenants
with, the Company and the Selling Stockholder that: (i) the Purchaser
is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in shares
representing an investment decision like that involved in the purchase
of the Shares, including investments in securities issued by the
Company, and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase
the Shares; (ii) the Purchaser is acquiring the number of Shares set
forth in Section 2 above in the ordinary course of its business and
for its own account for investment only and with no present intention
of distributing any of such Shares or any arrangement or understanding
with any other persons regarding the distribution of such Shares (this
representation and warranty not limiting the Purchaser's right to sell
pursuant to the Registration Statement or in compliance with the
Securities Act and the Rules and Regulations, or, other than with
respect to any claims arising out of a breach of this representation
and warranty, the Purchaser's right to indemnification under Section
8.3); (iii) the Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Shares
except in compliance with the Securities Act and the Rules and
Regulations; (iv) the Purchaser has completed or caused to be completed
the Registration Statement Questionnaire attached hereto as part of
Appendix I, for use in preparation of the Registration Statement, and
the answers thereto are true and correct as of the date hereof and will
be true and correct as of the effective date of the Registration
Statement and the Purchaser will notify the Company immediately of any
material change in any such information provided in the Registration
Statement Questionnaire; (v) the Purchaser has, in connection with its
decision to purchase the number of Shares set forth in Section 2 above,
relied solely upon the Private Placement Memorandum and the documents
included therein or incorporated by reference and the other Company
information provided to the Purchaser by the Company and the
representations and warranties of the Company contained herein; and (vi)
the Purchaser is an "accredited investor" within the meaning of Rule
501(a) of Regulation D promulgated under the Securities Act.
(b) The Purchaser understands that the Shares are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of the Securities Act, the Rules and
Regulations and state securities laws and that the Company is relying
upon the truth and accuracy of, and the Purchaser's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine
the availability of such exemptions and the eligibility of the Purchaser
to acquire the Shares.
(c) The Purchaser agreed orally with the Placement Agent to
keep confidential all information concerning this private placement.
The Purchaser understands that the information contained in the Private
Placement Memorandum is strictly confidential and proprietary to the
Company and has been prepared from the Company's publicly available
documents and other information and is being submitted to the Purchaser
solely for such Purchaser's confidential use. The Purchaser agrees to
use the information contained in the Private Placement Memorandum for
the sole purpose of evaluating a possible investment in the Shares and
the Purchaser hereby acknowledges that it is prohibited from reproducing
or distributing the Private Placement Memorandum, this Purchase
Agreement, or any other offering materials or other information provided
by the Company in connection with the Purchaser's consideration of its
investment in the Company, in whole or in part, or divulging or
discussing any of their contents. Further, the Purchaser understands
that the existence and nature of all conversations and presentations, if
any, regarding the Company and this offering must be kept strictly
confidential. The Purchaser understands that the federal securities
laws impose restrictions on trading based on information regarding this
offering. In addition, the Purchaser hereby acknowledges that
unauthorized disclosure of information regarding this offering may cause
the Company to violate Regulation FD.
(d) The Purchaser understands that its investment in the
Shares involves a significant degree of risk and that the market price
of the Common Stock has been volatile and that no representation is
being made as to the future value of the Common Stock. The Purchaser
has the knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in
the Shares and has the ability to bear the economic risks of an
investment in the Shares.
(e) The Purchaser understands that no United States federal
or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Shares.
(f) The Purchaser understands that, until such time as the
Registration Statement has been declared effective or the Shares may be
sold pursuant to Rule 144 under the Securities Act without any
restriction as to the number of securities as of a particular date that
can then be immediately sold, the Shares may bear a restrictive legend
in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for the Shares):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The securities
may not be sold, transferred or assigned in the absence of an effective
registration statement for the securities under said Act, or an opinion
of counsel, in form, substance and scope reasonably acceptable to the
Company, that registration is not required under said Act or unless sold
pursuant to Rule 144 under said Act."
(g) The Purchaser's principal executive offices are in the
jurisdiction set forth immediately below the Purchaser's name on the
signature pages hereto.
(h) The Purchaser hereby covenants with the Company and the
Selling Stockholder not to make any sale of the Shares without complying
in all material respects with the provisions of this Agreement, and if
applicable, without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied, and the Purchaser
acknowledges and agrees that such Shares are not transferable on the
books of the Company unless the certificate submitted to the transfer
agent evidencing the Shares is accompanied by a separate Purchaser's
Certificate of Subsequent Sale: (i) in the form of Appendix II hereto,
(ii) executed by an officer of, or other authorized person designated
by, the Purchaser, and (iii) to the effect that (A) the Shares have been
sold in accordance with the Registration Statement, the Securities Act
and any applicable state securities or blue sky laws and (B), if
applicable, the requirement of delivering a current prospectus has been
satisfied. The Purchaser acknowledges that there may occasionally
be times when the Company must suspend the use of the prospectus
forming a part of the Registration Statement (a "Suspension") until
such time as an amendment to the Registration Statement has been filed
by the Company and declared effective by the Commission, or until such
time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act. The Purchaser hereby covenants
that it will not sell any Shares pursuant to said prospectus during the
period commencing at the time at which the Company gives the Purchaser
written notice of the Suspension of the use of said prospectus and
ending at the time the Company gives the Purchaser written notice that
the Purchaser may thereafter effect sales pursuant to said prospectus.
Notwithstanding the foregoing, the Company, no Suspension shall be for
a period of longer than 30 consecutive days, and no Suspensions shall
be for a period of an aggregate in any 365-day period of longer than
65 days.
(i) The Purchaser further represents and warrants to, and
covenants with, the Company and the Selling Stockholder that (i) the
Purchaser has full right, power, authority and capacity to enter into
this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement, and (ii) upon the execution and
delivery of this Agreement, this Agreement shall constitute a legal,
valid and binding obligation of the Purchaser, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as the indemnification agreements of the
Purchaser in Section 8.3 hereof may be legally unenforceable.
SECTION 7. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements,
representations and warranties made by the Company, the Selling
Stockholder and the Purchaser herein and in the certificates for the
Shares delivered pursuant hereto shall survive the execution of this
Agreement, the delivery to the Purchaser of the Shares being purchased
and the payment therefor.
SECTION 8. Registration of the Shares; Compliance with the
Securities Act.
8.1 Registration Procedures and Expenses. The Company shall:
(a) subject to receipt of necessary information from the
Purchasers, as promptly as practicable, but in no event later than five
days after the date that the Agreements are executed, file with the
Commission the Registration Statement, which shall be on Form S-3,
relating to the sale of the Shares by the Purchaser and the Other
Purchasers from time to time on the Nasdaq National Market or the
facilities of any national securities exchange on which the Common Stock
is then traded or in privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of
necessary information from the Purchasers, to cause the Commission to
notify the Company of the Commission's willingness to declare the
Registration Statement effective within 60 days after the Registration
Statement is filed by the Company;
(c) promptly prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective until the earlier of (i) two years
after the effective date of the Registration Statement; (ii) the date
on which the Shares may be resold by the Purchasers without registration
by reason of Rule 144(k) under the Securities Act or any other rule of
similar effect; or (iii) such time as all Shares purchased by such
Purchaser under this Agreement have been sold.
(d) furnish to the Purchaser with respect to the Shares
registered under the Registration Statement (and to each underwriter,
if any, of such Shares) such number of copies of prospectuses and such
other documents as the Purchaser may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the
Shares by the Purchaser;
(e) file documents required of the Company for normal blue
sky clearance in states specified in writing by the Purchaser; provided,
however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which
it is not now so qualified or has not so consented;
(f) notify the Purchaser on the day that the Registration
Statement is declared effective;
(g) notify the Purchaser, at the time when a prospectus
relating to the Shares is required to be delivered under the Securities
Act, on the day of the happening of any event as a result of which the
prospectus included in the Registration Statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements in the prospectus not misleading; and, at the request of any
Purchaser, prepare a supplement or amendment to the prospectus so that,
when delivered to purchasers of the Shares, the prospectus, as
supplemented or amended, does not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
in the prospectus not misleading, and notify the Purchaser on the day of
the filing of such supplement or amendment;
(h) cause all such Shares to be quoted on the Nasdaq National
Market and listed on any other exchange on which the Company's shares
of common stock are listed;
(i) make available for inspection by each Purchaser, any
underwriter participating in any disposition pursuant to the
Registration Statement and any attorney, account or other agent
retained by any Purchaser or any such underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, employees and independent
accountants to supply all information reasonably requested by any
Purchaser or any such underwriter, attorney, accountant or agent in
connection with the Registration Statement;
(j) in the event of the issuance of any stop order suspending
the effectiveness of the Registration Statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any securities included in the
Registration Statement for sale in any jurisdiction, notify each
Purchaser on the day of such issuance, use its best efforts promptly
to obtain the withdrawal of such order, and notify each Purchaser on
the day of such withdrawal; and
(k) bear all expenses in connection with the procedures in
paragraphs (a) through (j) of this Section 8.1 and the registration of
the Shares pursuant to the Registration Statement, other than fees and
expenses, if any, of counsel or other advisers to the Purchaser or the
Other Purchasers or underwriting discounts, brokerage fees and
commissions incurred by the Purchaser or the Other Purchasers, if any.
A draft of the proposed form of the Registration Statement is
included in the Private Placement Memorandum and a questionnaire
related thereto to be completed by the Purchaser is attached hereto
as Appendix I.
8.2 Transfer of Shares After Registration. The Purchaser agrees
that it will not effect any disposition of the Shares or its right to
purchase the Shares that would constitute a sale within the meaning of
the Securities Act, except as permitted under the Securities Act and the
Rules and Regulations promulgated thereunder, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of
distribution.
8.3 Indemnification. For the purpose of this Section 8.3:
(i) the term "Purchaser/Affiliate" shall mean any affiliates
of the Purchaser and any person who controls the Purchaser or any
affiliate of the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and any underwriter
for any Purchaser; and
(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to,
and any document incorporated by reference in, the Registration Statement
referred to in Section 8.1.
(a) The Company agrees to indemnify and hold harmless each of
the Purchasers and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or expenses, joint or several, to which such
Purchasers or such Purchaser/Affiliates may become subject, under the
Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any claims or litigation, if such settlement is effected
with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement, including the prospectus, financial
statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration
Statement, including any information deemed to be a part thereof as of
the time of effectiveness pursuant to paragraph (b) of Rule 430A, or
pursuant to Rule 434, of the Rules and Regulations, or the prospectus,
in the form first filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations, or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) filing is
required (the "Prospectus"), or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
in any of them a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or
any amendment or supplement thereto not misleading in the light of the
circumstances under which they were made, or arise out of or are based
in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in this Agreement, or any failure
of the Company to perform its obligations hereunder or under law, and
will reimburse each Purchaser and each such Purchaser/Affiliate for any
legal and other expenses as such expenses are reasonably incurred by
such Purchaser or such Purchaser/Affiliate in connection with
investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however,
that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is
based upon (i) an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by
or on behalf of the Purchaser expressly for use therein, or (ii) the
failure of such Purchaser to comply with the covenants and agreements
contained in Sections 6(h) or 8.2 hereof respecting the sale of the
Shares, or (iii) the inaccuracy of any representations made by such
Purchaser herein or (iv) any statement or omission in any Prospectus or
any amendment or supplement thereto that is corrected in any subsequent
Prospectus or any amendment or supplement thereto that was delivered to
the Purchaser prior to the pertinent sale or sales by the Purchaser.
(b) Each Purchaser will severally, but not jointly, indemnify
and hold harmless the Company and the Selling Stockholder, each of the
Company's directors, each of the Company's officers who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act or any Selling Stockholder, against any losses, claims,
damages, liabilities or expenses to which the Company, each of its
directors, each of its officers who signed the Registration Statement,
any Selling Stockholder or any of their respective controlling persons
may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any claim or litigation, if
such settlement is effected with the written consent of such Purchaser)
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are
based upon (i) any failure to comply with the covenants and
agreements contained in Sections 6(h) or 8.2 hereof respecting the sale
of the Shares or (ii) the inaccuracy of any representation made by such
Purchaser herein or (iii) any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus,
or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements in the
Registration Statement or any amendment or supplement thereto not
misleading or in the Prospectus or any amendment or supplement thereto
not misleading in the light of the circumstances under which they were
made, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by the Purchaser expressly
for use therein, and will reimburse the Company and the Selling
Stockholder, each of the Company's directors, each of its officers who
signed the Registration Statement or controlling person for any legal
and other expense reasonably incurred by the Company and the Selling
Stockholder, each of the Company's directors, each of its officers who
signed the Registration Statement or controlling person in connection
with investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however,
that the liability of each Purchaser hereunder shall not exceed the net
proceeds recognized by such Purchaser upon the sale of the Shares.
(c) The Selling Stockholder will severally indemnify and hold
harmless each Purchaser, each Purchaser/Affiliate, the Company, each of
its directors and each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person
may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including the settlement of any claim or litigation, if such
settlement is effected with the written consent of such Selling
Stockholder) insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise
out of, or are based upon (i) any failure to comply with the covenants
and agreements of such Selling Stockholder contained in the Agreements
or (ii) the inaccuracy of any representation made by such Selling
Stockholder in the Agreements or (iii) any untrue or alleged untrue
statement of any material fact contained in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any amendment or supplement
thereto not misleading or in the Prospectus or any amendment or
supplement thereto not misleading in the light of the circumstances
under which they were made, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement,
the Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the Company
by such Selling Stockholder expressly for use therein.
(d) Promptly after receipt by an indemnified party under this
Section 8.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 8.3 promptly notify the
indemnifying party in writing thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8.3 or to the extent
it is not prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and
the indemnifying party and, based upon the advice of such indemnified
party's counsel, the indemnified party shall have reasonably concluded
that there may be a conflict of interest between the positions of the
indemnifying party and the indemnified party in conducting the defense
of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 8.3 for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed such counsel in connection with the assumption
of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel,
representing the indemnified parties who are parties to such action,
plus local counsel, if appropriate) or (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after
notice of commencement of action, in each of which cases the reasonable
fees and expenses of counsel shall be at the expense of the indemnifying
party.
(e) If the indemnification provided for in this Section 8.3
is required by its terms but is for any reason held to be unavailable to
or otherwise insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) of this Section 8.3 in respect to any losses,
claims, damages, liabilities or expenses referred to herein, then
each applicable indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of any losses, claims,
damages, liabilities or expenses referred to herein in such proportion
as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholder and the Purchaser from the placement
of the Common Stock contemplated by this Agreement and the relative
fault of the Company, the Selling Stockholder and the Purchaser in
connection with the statements or omissions or inaccuracies in the
representations and warranties in this Agreement that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by
the Company and the Selling Stockholder, respectively, on the one hand
and each Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by such Purchaser to the Company and the
Selling Stockholder, respectively, pursuant to this Agreement for the
Shares purchased by such Purchaser that were sold pursuant to the
Registration Statement bears to the difference (the "Difference")
between the amount such Purchaser paid for the Shares that were sold
pursuant to the Registration Statement and the amount received by
such Purchaser from such sale. The relative fault of the Company and
the Selling Stockholder, respectively, on the one hand and each
Purchaser on the other shall be determined by reference to, among other
things, whether the untrue or alleged statement of a material fact or
the omission or alleged omission to state a material fact or the
inaccurate or the alleged inaccurate representation and/or warranty
relates to information supplied by the Company, by the Selling
Stockholder or by such Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in paragraph (d) of this Section 8.3, any legal
or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The
provisions set forth in paragraph (d) of this Section 8.3 with respect
to the notice of the threat or commencement of any action shall apply if
a claim for contribution is to be made under this paragraph (e);
provided, however, that no additional notice shall be required with
respect to any threat or action for which notice has been given under
paragraph (d) for purposes of indemnification. The Company, the Selling
Stockholder and each Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8.3 were determined
solely by pro rata allocation (even if the Purchaser were treated as one
entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in this
paragraph. Notwithstanding the provisions of this Section 8.3, no
Purchaser shall be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that
such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8.3, the Selling
Stockholder shall not be required to contribute any amount in excess of
the gross proceeds received by the Selling Stockholder for the sales of
Selling Stockholder Shares under the Agreements. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Purchasers'
obligations to contribute pursuant to this Section 8.3 are several and
not joint.
8.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 6 or this Section 8 upon the
transferability of the Shares shall cease and terminate as to any
particular number of the Shares upon the passage of two years from the
effective date of the Registration Statement covering such Shares or at
such time as an opinion of counsel satisfactory in form and substance to
the Company shall have been rendered to the effect that such conditions
are not necessary in order to comply with the Securities Act.
8.5 Information Available. So long as the Registration Statement
is effective covering the resale of Shares owned by the Purchaser, the
Company will furnish to the Purchaser:
(a) as soon as practicable after available one copy of (i)
its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public
accountants), (ii) if not included in substance in the Annual Report to
Stockholders, upon the request of the Purchaser, its Annual Report on
Form 10-K, (iii) upon the request of the Purchaser, its Quarterly
Reports on Form 10-Q, (iv) upon the request of the Purchaser, its
Current Reports on Form 8-K, and (v) a full copy of the particular
Registration Statement covering the Shares (the foregoing, in each
case, excluding exhibits);
(b) upon the request of the Purchaser, all exhibits excluded
by the parenthetical to subparagraph (a)(v) of this Section 8.5; and
(c) upon the request of the Purchaser, a reasonable number of
copies of the prospectuses to supply to any other party requiring such
prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet
with the Purchaser or a representative thereof at the Company's
headquarters to discuss information relevant for disclosure in the
Registration Statement covering the Shares and will otherwise cooperate
with any Purchaser conducting an investigation for the purpose of
reducing or eliminating such Purchaser's exposure to liability under the
Securities Act, including the reasonable production of information at
the Company's headquarters, subject to appropriate confidentiality
limitations.
SECTION 9. Broker's Fee. The Purchaser acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the
sale of the Shares to the Purchaser. Each of the parties hereto hereby
represents that, on the basis of any actions and agreements by
it, there are no other brokers or finders entitled to compensation in
connection with the sale of the Shares to the Purchaser.
SECTION 10. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by
first-class registered or certified airmail, confirmed facsimile or
nationally recognized overnight express courier postage prepaid, and
shall be deemed given when so mailed and shall be delivered as addressed
as follows:
(a) if to the Company, to:
CompuDyne Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
City Place 1
185 Asylum Street
City Place, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: 860-278-3802
or to such other person at such other place as
the Company shall designate to the Purchaser in
writing; and
(b) if to the Purchaser, at its address as set forth at
the end of this Agreement, or at such other address
or addresses as may have been furnished to the
Company in writing.
(c) if to the Selling Stockholder, at the addresses set
forth in Exhibit A-1 hereto.
SECTION 11. Changes. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the
Company, the Selling Stockholder and the Purchaser.
SECTION 12. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and
shall not be deemed to be part of this Agreement.
SECTION 13. Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
SECTION 14. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and
the federal law of the United States of America.
SECTION 15. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but
all of which, when taken together, shall constitute but one instrument,
and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties.
Facsimile signatures shall be deemed original signatures.
SECTION 16. Entire Agreement. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking
with respect to such matters.
SECTION 17. Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
SECTION 18. Confidential Disclosure Agreement. Notwithstanding
any provision of this Agreement to the contrary, any confidential
disclosure agreement previously executed by the Company and the
Purchaser in connection with the transactions contemplated by this
Agreement shall remain in full force and effect in accordance with its
terms following the execution of this Agreement and the consummation of
the transactions contemplated hereby.
SECTION 19. Public Statements. Neither the Company nor the
Selling Stockholder shall issue any public statement or press release,
or otherwise disclose in any manner the identity of any Purchaser or
that any Purchaser has purchased the Shares without the prior written
consent of such Purchaser; provided, however, that the Company may
disclose such information in the Registration Statement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the day
and year first above written.
COMPUDYNE CORPORATION
By:__________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ MEZZANINE CAPITAL
FUND II, L.P., by ▇▇▇▇▇▇▇ ▇▇▇▇▇
MEZZANINE CAPITAL PARTNERS II, LLC, its
General Partner
By: _________________________
Name:
Title:
Print or Type: Name of Purchaser
(Individual or Institution):
____________________________
Name of Individual representing
Purchaser (if an Institution):
____________________________
Title of Individual representing
Purchaser (if an Institution):
____________________________
Signature by: Individual Purchaser or Individual
representing Purchaser:
____________________________
Address:_____________________________
Telephone:___________________________
Facsimile:___________________________
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Pages 23-24 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an
Institution)
(iii) Title of Individual representing Purchaser (if an
Institution)
(iv) Signature of Individual Purchaser or Individual
representing Purchaser
2. Appendix I - Stock Certificate Questionnaire/Registration
Statement Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire and the Registration Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
B. Instructions regarding the transfer of funds for the purchase of
Shares will be sent by facsimile to the Purchaser by the Placement
Agent at a later date.
C. Upon the resale of the Shares by the Purchasers after the
Registration Statement covering the Shares is effective, as
described in the Purchase Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the
buyer (prospectuses must be obtained from the Company at the Purchaser's
request); and
(ii) must send a letter in the form of Appendix II to the
Company so that the Shares may be properly transferred.
Appendix I
(one of two)
COMPUDYNE CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
-------------------------------
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be
registered in (this is the name that will
appear on your stock certificate(s)). You
may use a nominee name if appropriate:
_________________________________________
2. The relationship between the Purchaser of
the Shares and the Registered Holder listed
in response to item 1 above:
_________________________________________
3. The mailing address of the Registered Holder
listed in response to item 1 above:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
4. The Social Security Number or Tax Identification
Number of the Registered Holder listed in
response to item 1 above:
_________________________________________
Appendix I
(two of two)
COMPUDYNE CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
-------------------------------------
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly
as it should appear in the Registration Statement:
2. Please provide the number of shares that you or your organization
will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase
Agreement and those shares purchased by you or your organization
through other transactions:
3. Have you or your organization had any position, office or other
material relationship within the past three years with the
Company or its affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships
below:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
4. Are you (i) an NASD Member (see definition), (ii) a Controlling
(see definition) shareholder of an NASD Member, (iii) a Person
Associated with a Member of the NASD (see definition), or (iv)
an Underwriter or a Related Person (see definition) with respect
to the proposed offering; or (b) do you own any shares or other
securities of any NASD Member not purchased in the open market;
or (c) have you made any outstanding subordinated loans to any
NASD Member?
Answer: [ ] Yes [ ] No If "yes," please describe below
________________________________________________________________
_________________________________________________________________
_________________________________________________________________
NASD Member. The term "NASD member" means either any broker or
dealer admitted to membership in the National Association of Securities
Dealers, Inc. ("NASD"). (NASD Manual, By-laws Article I, Definitions)
Control. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession,
direct or indirect, of the power, either individually or with others, to
direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract,
or otherwise. (Rule 405 under the Securities Act of 1933, as amended)
Person Associated with a member of the NASD. The term "person
associated with a member of the NASD" means every sole proprietor,
partner, officer, director, branch manager or executive representative
of any NASD Member, or any natural person occupying a similar status or
performing similar functions, or any natural person engaged in the
investment banking or securities business who is directly or indirectly
controlling or controlled by a NASD Member, whether or not such person
is registered or exempt from registration with the NASD pursuant to its
bylaws. (NASD Manual, By-laws Article I, Definitions)
Underwriter or a Related Person. The term "underwriter or a
related person" means, with respect to a proposed offering, underwriters,
underwriters' counsel, financial consultants and advisors, finders,
members of the selling or distribution group, and any and all other
persons associated with or related to any of such persons. (NASD
Interpretation)
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
------------------------------------------
The undersigned, [an officer of, or other person duly authorized by]
_____________________________________________________________ [fill in
official name of individual or institution] hereby certifies that he/she
[said institution] is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on _______________
[date] in accordance with Registration Statement number
____________________________________________ [fill in the number of or
otherwise identify Registration Statement] and the requirement of
delivering a current prospectus by the Company has been complied with in
connection with such sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
Purchaser (if an
Institution): ______________________
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser: ______________________
Exhibit A-1
SELLING STOCKHOLDER
-------------------
Address
for Number of Shares
Name Notices to be Sold
---- ------- ----------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mezzanine ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1,373,431
Capital Fund II, L.P. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Reinhart, Boerner, Van Deuren,
▇▇▇▇▇▇ & Rieselbach, S.C.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: 414-298-8097
Total: 1,373,431
Exhibit B
Name of Subsidiary Jurisdiction of Incorporation
------------------ -----------------------------
CompuDyne Corporation Nevada
SYSCO Security Systems, Inc. Nevada
CompuDyne Corp. of Maryland Maryland
Quanta Systems Corporation Connecticut
CompuDyne, Inc. Delaware
CorrLogic, Inc. Nevada
▇▇▇▇▇▇▇ Security Group, Inc. Delaware
Norshield Corporation Alabama
▇▇▇▇▇▇▇ Industries S.A. (Pty) Ltd. South Africa
Fiber SenSys, Inc. Oregon
New Tiburon, Inc. Virginia
Exhibit C
OPINION OF COUNSEL TO SELLING STOCKHOLDER
-----------------------------------------
1. Upon the delivery by the Selling Stockholder to the Purchasers
of certificates for the Selling Stockholder Shares against payment
therefor as provided, assuming that each Purchaser who has severally
purchased such Shares acquires such Selling Stockholder Shares in good
faith and without notice of any adverse claim (within the meaning of the
applicable Uniform Commercial Code) or defect in the validity of the
such shares, such Purchaser will have acquired all of the rights, title
and interest of the Selling Stockholder to the Selling Stockholder
Shares sold by the Selling Stockholder hereunder free and clear of any
adverse claim; and
2. The sale of the Selling Stockholder Shares by the Selling
Stockholder pursuant to this Agreement, the compliance by the Selling
Stockholder with the applicable provisions of this Agreement do not (A)
to such counsel's knowledge require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and such as
may be required under the Securities Act, the rules of the NASD and
applicable state securities or blue sky laws, or (B) conflict with or
result in a breach or violation of any of the terms and provisions of
the Partnership Agreement of the Selling Stockholder; and to our
knowledge, the compliance by the Selling Stockholder with the
applicable provisions of this Agreement will not result in a violation
of any statute (assuming compliance with all applicable federal and
state securities laws) or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator known to such counsel to be applicable to the Selling
Stockholder.
